WITH buy-to-let purchases accounting for 10-11% of all housing transactions, many argue investors keep the housing market afloat by filling the gap left by vanishing first-time buyers.

WITH buy-to-let purchases accounting for 10-11% of all housing transactions, many argue investors keep the housing market afloat by filling the gap left by vanishing first-time buyers.

Others, however, take the opposite view that investors are an unknown quantity which could threaten the entire housing market. That is the approach of two new reports on the market.

The Roof Affordability Index published in Roof, the monthly magazine of the housing charity Shelter, confirms that the number of first-time buyers sank to just 355,000 in 2003 - the lowest since records began 30 years ago.

Buy-to-let purchases soared from 72,000 in 2001 to 117,000 last year - 24% of all new money coming into the housing market.

"If buy-to-let investors cut and run, this could be the catalyst of a severe slowdown. "On the other hand, if homeowners continue to see buying a home to rent out as the best investment bet for the future, the gap between housing's haves and have nots could continue to widen."

A similar argument - that buy-to-let is a gamble which could yet go wrong - emerged in a report from brokers Durlacher, which warned property prices could fall 45%.

At least, the slump should last only two years, against five for the crash which began in 1988, it said.